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1. Brief Introduction
The two companies D/S Svendborg and D/S 1912 have for almost a century been the parent companies
of the A.P. Møller Group. These companies were founded by Mr. Arnold Peter Møller and his father
Captain Peter Mærsk Møller. They were in the beginning entirely into shipping. In 1912, the fleet
consisted of 6 vessels.
Much has happened since the company was founded: The A.P. Møller Group has by any standards
become the biggest company in Denmark. Moreover, "Svendborg" and "1912" have recently been
merged into one company "A.P. Møller – Mærsk A/S". However, as we shall be concerned with the
performance of the company also in the past we will repeatedly make reference to the historic parent
companies.
As "Svendborg" and "1912" grew bigger they expanded into a number of other businesses. It is
common to split the main businesses of the APM Group into three broad categories:

Over the last 25 years the Danish economy has had difficulties in growing as fast as
other EU countries and the United States. While the average growth difference is small, it
signals that if this trend persists into the next century, Denmark will not be able to maintain its
high position in the world income hierarchy. Moreover, during these years, the number of
individuals living on transfer incomes have increased dramatically. Although we interpret
both tendencies as signals of structural weaknesses, we are also aware that these developments
may reflect that other goals in economic policy have been pursued, such as protecting the
environment and/or achieving certain redistributive objectives. This paper analyzes this and
other broad policy issues of importance for Denmark.

This paper analyzes the consequences of pursuing a less activist Government
employment stabilization policy strategy in Egypt. On the basis of a fairly stylized model we
find that a reduction of the Government’s involvement in the economy along with an
introduction of mild but binding firing regulations in the private sector may lead to a rise in total
employment and to an improvement in Egypt’s trade balance vis-à-vis the rest of the world.

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Price-earnings ratios are part of the toolkit that is used for assessing the valuation of
individual firms on the stock market as well as the entire market itself. This paper
presents consistent P/E series for the liquid Danish shares adjusted for share buybacks.
The results show that over the period from 1969 to 2003, the average (trailing)
P/E equals 13.5. The P/E reaches its lowest level in 1980, which is likely to be due to
a soaring oil price, high wage increases and interest rates approaching 20 percent.
Notwithstanding optimistic equity pricing also in Denmark in the late 1990s, the
upturn in Danish valuations was more moderate than in the US. The correction that
sets in subsequently reversed essentially the gains in the Danish P/E in the 1990s.

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Abstract:
This paper contributes to the growing literature on mean reversion in stock markets by
examining a newly constructed Danish data set for the period 1922-95. Variance ratio tests
clearly reject the random walk hypothesis at the 2-year horizon, that is, the riskiness of a 2-
year investment is significantly less than twice the risk of a 1-year investment. Variance ratio
tests for 3- and 4-year horizons are not significant under conventional significance levels,
whereas autocorrelation tests of the joint hypothesis that there is departure from random walk
at all horizons tend to reject the random walk hypothesis and support the mean reversion
hypothesis.

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A number of influential studies have documented a strong value premium for US stocks over the period 1963 to 1990 (Fama and French (1992), Lakonishok et al. (1994)). Stocks with low price-earnings multiples, price-book values and other measures of value are reported to have given a higher mean return than the high multiple growth firms. Work by Basu (1997) and others have shown that the value dominance is also a feature of the earlier market history of the United States. The value premium is reported also to exist in a number of other countries over the period 1975 to 1995 (Fama and French (1998)). The results for these markets are based on Morgan Stanley (MSCI) data. Since these data are softer due to a relatively short time horizon and due to a small number of stocks in some cases down at 10 stocks, the conclusions are likely to be less robust. There is therefore a need for more research on this issue. The purpose of this paper is to report evidence for the Danish stock market and to test whether the value premium is a genuine long-term feature of the market or just a phenomenon that pops up now and then. To research this issue we have collected accounting and stock market data for more than half a century. We report in particular on the insights obtained when portfolios are formed on the basis of the price-earnings multiple. The paper shows that there is a value premium. The paper also analyzes whether the premium is likely to be due to risk (Fama and French (1992,98)) or mispricing as emphasized by the Behavioral Finance School (Chan et al. (2000), Lakonishok et al. (1994) and La Porta et al. (1997)).

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A number of influential studies have documented a considerable value premium for US stocks over long periods of time. Value stocks, defined as companies that trade at low price-earnings or price-book values, are reported to have given a higher mean return than growth stocks trading at high multiples. Outside the US, there is also robust evidence of a value premium for the UK, but otherwise the evidence is more uncertain due to data shortages. Studies of continental European and Asian markets are, for example, based on data that typically only covers 20 years of market history. The purpose of this paper is to report evidence for the Danish market using a consistent data set that extends over the period 1950-2008. On the basis of these data the paper investigates whether the value premium is a stylized fact or just a phenomenon that pops up every few decades only to disappear again. The results show that the Danish value premium exists and is significant over the long run. However, this paper also shows that the premium is not a simple constant but is volatile even across decades.

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A number of influential studies have documented a considerable value premium for US stocks over long time periods (Fama and French (1992, 2008), Lakonishok et al. (1994)). Stocks with low price-earnings multiples, price-book values and other measures of value are reported to have given a higher mean return than stocks with high multiples and high asset growth (Cooper et al. (2008)). Outside the US, the evidence is more uncertain due to data shortages. On the basis of a unique data set that extends over more than half a century, this paper not only shows that there is a value premium in the Danish market but also that growth stocks only produce high earnings growth in the run-up to portfolio formation. Growth stocks are therefore likely to have disappointed investors. We therefore also estimate the proportion of the premium that can be explained by growth stocks’ earnings disappointment.